Prices continued to drop Monday in most of the East and at some locations in the Midcontinent and Midwest as moderate weather in most areas, ample storage supplies and screen weakness on the prior trading day again weighed on the cash market. Flat to a little more than $1.25 higher numbers at several points, primarily in the Midcontinent and Rockies, were able to benefit from the post-weekend return of industrial load and to some extent from bargain hunting after dropping to less than $2 in some instances Friday.
A sizeable majority of points recorded losses ranging from about a nickel to 40 cents or so.
Rallies are unlikely in much of the market — and Monday’s rising points will have difficulty in sustaining their firmness — Tuesday after November natural gas participated in an overall energy futures slide that was based on worldwide stock market crashes spurred by economic woes and tight credit (see related story).
Northeast quotes fell again despite the coldest air since last spring moving in Monday night to drop temperatures into the 30s as far south as northeast West Virginia, The Weather Channel (TWC) said. Frost and freeze advisories were being posted from Pennsylvania north to Vermont, it added.
Continued softness was more understandable in the Midwest, which was in a warming trend that would take Tuesday’s highs into the mid 60s in the Upper Midwest and to either side of 70 in more southerly sections of the region.
Much of the South will bask for a while longer in Indian summer-type conditions with highs in the low to mid 80s. Obviously such moderate warmth isn’t creating enough cooling demand to resurrect softer Gulf Coast prices. Also, a cold front will take temperatures a bit lower Tuesday in the lower Mississippi Valley, TWC said.
A storm system moving into the Northwest Monday night should be reaching the northern Rocky Mountains Tuesday, bring snow to upper elevation levels in the mountain areas, according to TWC. Denver was forecast to see a high in the low 40s Tuesday, but some parts of the desert Southwest will be approaching the upper 90s.
Issues of excess supply were surfacing in the West and tending to depress some prices, especially on the El Paso system. The pipeline reported setting the probability of its declaring a Strained Operating Condition or Critical Operating Condition to high Sunday and maintaining that probability through at least Monday because of high linepack. Westcoast also was reporting high linepack throughout its system Monday.
More producers are cutting back on drilling plans and/or capital expenditure budgets in response to price softness and the growing credit crunch. Independents Devon Energy and PetroQuest Energy became the latest to announce such actions Monday (see related story).
Based on reports from 62 companies, Minerals Management Service (MMS) said 3,001 MMcf/d of production remained off-line Monday in the Gulf of Mexico (GOM). That represented a reduction of 302 MMcf/d since Friday. MMS also said crude oil shut-ins and platform evacuations had fallen to 600,679 b/d and 94, respectively. No reports of evacuated mobile drilling rigs were received, the agency added.
A low-pressure area over Mexico’s Bay of Campeche developed enough to qualify as Tropical Depression Thirteen Monday morning, the National Hurricane Center reported. The system was unlikely to threaten U.S. offshore production, as it was expected to make landfall Tuesday morning on the central Mexican coast and dissipate rapidly. It was further upgraded to Tropical Storm Marco Monday afternoon.
The number of drilling rigs searching for gas in the U.S. fell by 15 during the week ending Oct. 3, according to the Baker Hughes Rotary Rig Count (https://intelligencepress.com/features/bakerhughes/). All of the decline occurred onshore, where the count fell by 19; that was partially offset by a GOM gain of four, Baker Hughes said. Its latest tally was down 3% from a month ago but 8% above the year-earlier level.
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